A storm is gathering in the clouds, not just with #Sandy moving towards the northeast US, but with rumbling within the Salesforce Marketing Cloud. This week, it emerged that Salesforce.com’s biggest acquisition, social media campaign manager Buddy Media, is losing more than $40 million a year, while Salesforce’s social media markeing firm, Radian6, is reorganizing and shedding jobs.
Salesforce spokesperson Jane Hynes’ statement in part: “With the integration of Radian6 and Buddy Media, the Salesforce Marketing Cloud is rebalancing its resources to support its growth, including moving from a hub to a distributed model for certain customer-facing roles, consolidating marketing, and dramatically increasing investments in R&D. Fewer than 100 people globally have been impacted.”
Salesforce acquired Buddy Media in August for $745 million, a time it was churning through more than $42 million a year, while Radian6, Salesforce’s previous marquee acquisition was cash-flow positive at the time of its $325 million acquisition in March of 2010.[more]
Some in the media immediately labeled Buddy Media a “money pit,” and published their income statement, including reports it was “bleeding money” prior to the $689 million acquisition. Buddy Media’s amended 8-K shows $20 million in net losses for the first six months of the year.
Jeremiah Owyang, industry analyst at Altimeter Research, told Venture Beat, “When you acquire two companies, it makes sense to slash a lot of jobs that are replicating each other on individual accounts. How many managers or HR managers do you need on the same account?”
Jim Moore, founder and managing director of J. Moore Partners, an M&A advisory firm, chimed in, “It’s just too premature to make a call. If the layoffs were on the administrative, sales and marketing side, I don’t see any reason to say these acquisitions have not been successful.”
Radian6 and Buddy Media (whose clients include L’Oreal and Virgin Mobile Live) offer complementary products for the Salesforce Marketing Cloud, with the former providing means for companies to listen to how people are talking about their brands on social platforms, and the latter offering a full-scale social marketing dashboard with publishing and analytics.
Competitors include Oracle, which has been accused of underhanded tactics (by no less than Ford’s social media head Scott Monty) as it’s aggressively ramping up “with massive advertising campaigns in an effort to assert their market dominance. Or perhaps the solutions offered by Radian6 and Buddy Media had too much crossover, and Salesforce is attempting to trim the fat while honing the Marketing Cloud.”
The Canadian-based Radian6, headquartered in New Brunswick, was a technology darling in the province and indeed Canada, and counts as clients Dell, GE, Pepsi, 3M, UPS, and Molson. Now, New Brunswick NDP political leader Dominic Cardy is “calling on the [Premier David Alward] to cancel the $3.8 million handout to Radian6 and to provide a full accounting of how the rebate was negotiated, what conditions were included, and how the government plans to avoid similar mistakes in the future.”
The news of its downsizing was first reported by Canadian new site, TechVibes, which revealed it was hearing that Radian6’s marketing and social community departments had been “decimated.”
Just days before the news of troubles at Radian6 and Buddy Media, Salesforce.com Chairman and CEO Marc Benioff opened Cloudforce New York in New York, declaring how how social media and marketing, coupled with next-gen social analytics, are changing business as we know it. And just before he spoke, Buddy Media CEO, Michael Lazerow, introduced Buddy Media + Radian6 = The Salesforce Marketing Cloud, when the skies were still sunny. Now it’s still a muddled forecast for both parts of the Salesforce cloud.